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Amazon Web Services disclosed that its in-house data center chips, Trainium and Graviton processors, have an annual run rate exceeding $10 billion.

However, this growth comes with a significant cost. Amazon CEO Andy Jassy announced plans to invest a record $200 billion in capital expenditures in 2026, focusing on AI, chips, robotics, and low earth orbit satellites.

Jassy emphasized that the majority of the capital spending is directed towards AWS, with a commitment to maximizing capacity deployment.

He defended the substantial investment, comparing it to the early stages of the core cloud business and highlighting the transformative potential it holds for AWS and Amazon as a whole.

When discussing AI demand, Jassy used a “barbell” analogy, distinguishing between AI research labs and enterprises utilizing AI for everyday tasks.

The $200 billion investment is primarily aimed at core enterprise production workloads, a segment Jassy believes has significant untapped potential.

Amazon’s strategy aligns with a broader trend of tech giants increasing their AI infrastructure spending.

In 2025, Amazon generated $139.5 billion in cash from operations, witnessing a 20% growth. However, after accounting for infrastructure development, free cash flow decreased to $11.2 billion.

Despite record earnings, Amazon’s focus on expanding AI capabilities has led to a decrease in available cash for shareholders.

Following the earnings report, Amazon’s shares experienced a 10% decline in after-hours trading, partly due to a capex projection that missed Wall Street’s expectations.